- 05 Jun
A Warning About Invoice Fraud.
Avoiding invoice fraud is an important part of providing invoice finance and running any business. We were recently speaking to one of our funding partners who outlined a fraud methodology that is being currently being used. This method of boosting the credit worthiness of a company had been used in an attempted fraud against this particular funder.
Amended Accounts Debtor Fraud
The fraudsters start by acquiring a company that has been established for a good period of time, but one that might have been in poor financial shape, and has filed poor sets of financial trading accounts. The size of the company is such that it falls under the level that requires a full audit of their financial accounts to be completed.
The fact that they financial position is poor means that the cost of the acquisition will be greatly reduced. The fraudsters then file an amended set of accounts, to update the last set of financial accounts filed at Companies House. They use a fake set of accounts, that they produce, showing an improved financial position.
Whilst this may be detectable if you pull down all the accounts, the fraud relies upon credit agency's automated processes taking the numbers from the amended accounts and increasing the credit limits that they are prepared to offer on the company. This credit limit could be then used by credit insurers, or invoice financiers, to guide the amount of insurance, or funding that they will allow against invoices to that debtor.
The fraudsters then approach an invoice funder, and seek funding against fictitious invoices to the debtor (for which the amended accounts were filed). From a credit perspective, the debtor company checks out and leads the finance company to provide funding against the invoices.
Warning - Watch Out!
If you see a set of "amended" accounts filed at companies house, you might want to dig further to understand what lay behind the amendment. In most cases it may well be legitimate reason e.g. an accounting error that needed to be corrected. However, the amended accounts may form part of the fraud detailed above. This type of fraud could be just as easily perpetrated against a supplier (seeking goods on credit terms without ever paying for them), so - warning - it is one to watch out for.
- 11 Nov
How To Get Invoices Paid
This post explains the steps that you can take to get invoices paid.When you offer your customers trade credit, typically you will raise a credit invoice that you send to the customer to request payment at a given future date. At that point the customer becomes your debtor.In some trades, such as construction, instead of an invoice an "application for payment" is presented to the customer. Which...
- 11 Oct
Credit Control Tips
Credit control is a key part of the services that we find for our clients, therefore I am always on the lookout for credit control tips that we can share. Recently I have seen a couple of useful articles, listing some invoice chasing tips.You can also read our free guide to running your own credit control function.Veritas shared an AAT publication - "Chasing Late Payments Without Awkwardness"....
- 13 Aug
Pre-dunning is the practice of contacting a debtor, to confirm that payment is due to be made, before the debt has fallen due. This can form part of your normal credit control process to chase in outstanding debts."Dunning" is the process of communicating with debtors regarding the collections of accounts receivable. "Pre Dunning" is when you communicate prior to the debt having fallen due.Whilst...
- 23 Jul
100K Average Sales Outstanding Are Not Being Chased Up.
According to new research on behalf of Lloyds Bank Commercial Banking, London based businesses are owed an average of £98,000 in outstanding customer invoices, and a third of UK businesses that were paid late in the last year, DID NOT chase up their outstanding payments.This research was reported by Business Money (10th July 2019), and it is unbelievable to think that London businesses could...
- 13 Jun
Notes On Analysing A Company Balance Sheet.
Analysis of a company's balance sheet allows you to understand what assets and liabilities fall within the business, and whether the business is liquid (has enough liquid assets to pay its short term creditors as they fall due) and solvent i.e. assets exceed liabilities. Therefore it can be helpful in trying to establish the financial position of a company e.g. to decide on granting a credit...
- 07 Jun
How I Analyse A Profit And Loss Account
Analysing the profit and loss account (P & L) of a company can give you some idea of how well the business is trading. You should be able to see if its sales volume is growing, or decreasing. You should also be able to see whether it is profitable, or it is loss making.Growth or profitability provides no guarantee that you will be paid on time, or that the business even has the money to pay you....
- 06 Jun
How I Analyse Financial Accounts
Analysing the financial position of an individual or a person is not a straightforward thing to do, but having spent a number of years working within credit underwriting, I have dissected countless sets of financial accounts.Often the information that is available, even if you subscribe to credit information services, it can be fairly limited. In addition to financial accounts (which you can get...
- 15 Apr
Help Raising Sales Invoices To Customers On Credit Terms
If you are looking for help raising sales invoice to your customers, on credit terms, we have pulled together a number of useful resources that will assist you.If you need the services of someone to do this for you, please get in touch and we will put you in contact with someone that can help.Accounting software packages tend to take all of the work our of raising your sales invoices, by doing...
- 22 Mar
Selective Invoice Finance With Free Auto Dunning
Selective invoice finance is a service that we are often asked about by prospect. There are a growing number of companies offering the service, and as I have mentioned in previous posts the operational approach and pricing can differ between providers.We have regular meetings with the providers, in order to keep up to date with the structure of their products, their pricing approach etc. We had...
- 15 Feb
Saving The Annual Salary Of A Credit Controller
According to figures published by Payscale, the average salary of a UK credit controller is now almost £21K per annum, with additional bonuses and commission averaging a further £6.5K, excluding employers national insurance, and any pension contributions you have to make (currently a minimum of 2% of earnings).DISCUSS OUTSOURCING OR FACTORINGAt the top end of the pay scale, the basic salaries...
- 18 Jan
Late Payment Problem?
Battling with a late payment problem? You might feel like you are all alone by recent research from Close Brothers Invoice Finance suggests that is not the case. It suggests that many other UK SMEs are being affected by slow payments, and this has been highlighted by several sources of independent research.Their poll found that 42.8% of SMEs say that late payments are a problem for their...
- 15 Jan
Solutions To Late Payments From Customers
Late payments are still causing cash flow problems for UK SMEs.An email just received from one of our new funding partners, My Muse, was headed "48% of SMEs impacted by late payments". It goes on to quote some recent Dun & Bradstreet research that has revealed that the average amount owed in late payments has increased by almost 25% over the last year to an average of over £80K. Within this...
- 14 Dec
Costs Of Collecting Late Payments Rising According To New Research
New research from Bacs Payment Schemes Ltd (Bacs) shows that the cost of collecting late payments, due to SMEs, has more than doubled to £6.7 billion (£2.6 billion in 2017).A huge 78% of SMEs are now forced to waiting 1 month or more, beyond their standard terms, to get paid by their customers. That is a huge amount of cash tied up in unpaid receivables.40% of SMEs affected by late payments say...
- 18 Jun
Why Do Large Companies Pay Late?
I've just answered a question posed online about "why do large companies pay late?".Firstly its worth mentioning that this does not apply to all large companies. We deal with numerous financial services companies who tend to pay very quickly.There are a couple of key reasons for some large companies paying late, which are explained below. Despite there having been a tightening up on large...
- 30 May
Collect Invoices Faster As An Alternative To Borrowing
There is a huge cash flow benefit to be acheived from collecting in your sales invoices faster, in a timely manner.The quicker you get paid by your customers, the more cash and hence working capital you will have available to your business, and therefore the less you will have to source e.g. by borrowing.If you have an outstanding sales ledger of £100,000, and a debt turn of say 60 days (the...
- 07 Apr
Do You Know The Standard Payment Terms Your Customers Can Take?
Did you know that the standard payment terms in the UK are 30 days from the date of your invoice?Many will not be aware that if you did not specify payment terms within the contract with your customer, there are default standard credit terms that will apply to your invoice. At the current time, those are payment within 30 days of the invoice date. You can check this for yourself on the government...
- 20 Feb
Chasing Invoices Via Social Media
I noticed an interest in chasing unpaid sales invoices via social media and I thought it would be good to add something about this to our existing comprehensive credit control guide.The first question is whether this is the right channel to use or not?I think the truth is that if you have resorted to using social media such as Twitter, Facebook, LinkedIn or Google+ to chase your invoices, you...
- 17 Nov
Need Help Chasing Invoices?
Do you need help chasing your unpaid sales invoices? Our focus is often on sourcing finance for our customers, but in some cases it is a credit control service that they need, and we have plenty of options available.We have a number of providers that can offer these types of services, and using them can both speed up your debt turn, get your invoices paid and remove the need to employ your own...
- 02 Aug
Credit Control Agency
One of the credit control agencies that we work with have been able to provide some first class credit control support to one of our clients, who needed help getting their unpaid invoices collected in. The agency took over the collection of the invoices from customers and they have improved the speed with with they are paid, reducing our client's debt turn. So they have a good track record of...